Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, I would like to emphasize that the functionality for the question-and-answer queue has recently changed. Instructions will be given at that time. As a reminder, this conference is being recorded. I’ll now turn the conference over to Chief Investor Relations Officer and Executive Vice President of Corporate Initiatives, Mr. Joe Dorrego. Please go ahead, sir.

Thank you, operator. Good morning and welcome to our fiscal 2021 second quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chairman and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the Investment Community. Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA, as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are both available in the Investor Relations section of our website. And with that, I'm pleased to turn the call over to Lachlan.

Thanks, Joe. Good morning and thank you all for joining us to discuss our second quarter results. Financially and operationally, we continued our impressive results and strong momentum in the quarter with EBITDA growing by 17%, driven by revenue growth of 8%. These financial results were led by exceptional gains in advertising revenues, which grew by 14%, spurred by the record political cycle, in which we generated more than $420 million of net political revenue company-wide during calendar 2020. The overall advertising strength was propelled by our FOX Television Stations, gains at FOX News Media, and the dramatic growth of Tubi. Beyond advertising and because of the substantial pricing power of our brands, our affiliate revenues grew by 6% despite a reserve taken for potential distribution credits. While we experienced a decline in subscriber volume, the trend improved for the third consecutive quarter. This quarter, we saw industry subscribers decline just above 5%, which is more than a 50 basis point improvement from what we experienced in Q1. The financial performance of Fox is illustrative of the strength of the core brands that anchor our company and of the contributions of new assets to lay the groundwork for continued growth and rapid evolution. As you know, the news cycle over the last year has been quite active and it has led directly to gains across our local stations as well as all the networks and extensions of FOX News Media. For example, Fox’s ability to provide the best in local news was on full display at FOX 5 Atlanta during the Georgia Senate runoffs. Not only did our colleagues at FOX 5 report on the national significance of the Georgia election, they also expanded news coverage in response to viewer demand, held a candidate debate and produced special runoff programming focused on the issues impacting Georgia voters. During the entire runoff period, FOX 5 was the number one station in Atlanta for a 6.5-hour morning news block. Hard work begets just rewards. And so, it’s no surprise we led the market in political revenues generated. This success was replicated across the FOX Television Stations footprint. Net political revenue approximated $190 million in the quarter, bringing our total for the stations in the first half of the fiscal year to approximately $260 million, an amount more than three times greater than the last presidential cycle. The news cycle also continued to connect engaged audiences to the various FOX News Media platforms: linear, digital, radio, and streaming for news, analysis, and opinion. In fact, the FOX News Channel finished the quarter with the highest average prime time ratings in the history of cable news. The FOX News Channel closed the calendar year as the number one television network in weekday prime time, continuously topping all broadcast networks and total viewers since the early months of 2020. FOX News was number one in election night coverage during prime time, beating all television networks and averaging a 25% share of total viewers. While calendar 2020 ratings were record-breaking, we are now seeing the expected post-election audience pullback that we anticipated on this call last quarter, and which is consistent with prior election cycles. We fully expect that the overall news audience will normalize and our share of ratings will dominate. In fact, this trend is already beginning as we have seen substantial share gains versus our competition since the inauguration. As in the past, we are confident that the strength and breadth of the FOX News Media businesses position us for sustained long-term growth. I’m pleased to announce that FOX News Media CEO, Suzanne Scott, has extended her term with the company. Under her leadership, FOX News has expanded its reach for consumers and has diversified significantly to become a multi-platform media brand. I’ve been fortunate to work closely with Suzanne over the last several years, and I’ve seen in action her ability to seamlessly guide the newsroom as stories break, her openness to new ideas, and her ability to innovate new opportunities to grow our business. I’m also happy with the programming changes that Suzanne is implementing, including Larry Kudlow’s show on FOX Business Network that will premiere next week. We all welcome Larry to FOX. Turning to other areas of the company. Our mix of assets is drawing viewers flocking in even greater numbers to FOX Sports and Tubi post-election. FOX Sports leadership and live events demonstrate why it proudly and correctly claims to own the fall. Even within an atypical fall sports schedule, it was crowded with out-of-season events that had been postponed earlier in the year and included unexpected and sudden cancellations. Fox clocked nearly 170 billion minutes of live sports viewing in the fall, more than 50% above the next competing network. Our 27th season of the NFL demonstrated that Fox continues to be the preeminent broadcaster of America’s most popular sport. With nearly 45 million viewers tuning in to Fox for the NFC Championship game, we eclipsed last year’s NFC Championships audience that was broadcast during the later window. I want to congratulate the NFL for completing its season last Sunday. I know many of you on this call worried about the risks associated with Fox, if the NFL season fell short. It’s a testament to the leadership of Commissioner Goodell and the professionalism of both the NFL and the incredible team at FOX Sports that we were able to deliver and broadcast such a historic season. Proud is not my favorite word or concept, but I am very proud of our team for this achievement. Elsewhere, the return of live sports boosted our sports wagering partnership, FOX Bet. After adding nearly 3 million players during the NFL season, FOX Bet Super 6 now has a user base in excess of 4.3 million players and continues to be the biggest free-to-play game of its kind in the country. We also continued our successful track record with non-sports Super 6 contests. For example, the Super 6 game covering the Georgia Senate runoff and the recently launched Stock Market Challenge game and weekly Quiz Show as promoted on Fox & Friends, enabled us to fully engage non-sports fans who generally wouldn’t interact with the wagering brand. A key differentiator for FOX Bet has been across promotional power of all of Fox’s assets to ignite the FOX Bet brand. In a similar fashion, we have mobilized the entire Fox portfolio to support and supercharge Tubi, which we acquired less than a year ago. This strategic acquisition, which is already a core asset for Fox Corporation, clearly merits some focused commentary. Tubi is an exciting growth engine for the company and a key strategic platform for not only our digital expansion but also our broader reimagining of Fox’s broadcast model for the future. In fact, I believe Tubi is an investment in what we internally call the broadening of broadcast, meaning the FOX Network and Tubi combining seamlessly to create a modern network-inspired business. With Tubi as part of our portfolio, Fox broadens from being the leader in broadcast network television into a leader in linear and streaming ecosystems. Both Fox and Tubi deliver distinct value to our viewers, partners, and advertisers already. And we believe Tubi’s technology and market approach, coupled with Fox’s unique positioning as a focused network-first business, make them even more impactful when operated and offered together. You know the broadcast network well and our marketplace differentiation, so I’ll focus on the already meaningful momentum and results of Tubi, and the significant sustainable growth that we envision ahead. Tubi has seen dramatic year-over-year increases across every key metric and it continues to grow beyond even our best acquisition expectations. Over the first half of the year, we have seen yearly unique viewers more than triple, total view time grow by nearly 70%, and revenue more than double. In fact, Tubi’s revenue for this past quarter alone broadly approximated Tubi’s revenue for the entire fiscal year before we acquired the company. While some streaming services focus attention on metrics like sign-ups or monthly active users, we think the most meaningful metric when measuring the performance of any AVOD service is Total View Time or TVT, as it is viewership that has a direct and proportional relationship to advertising inventory and revenue opportunities. It is this profile of Tubi that is driving digital advertising partners to engage with our audience. Looking ahead to our plans to continue to boost Tubi, let me give you a bit more color on our content, technology, and synergies strategies. Tubi’s vast content library, by design, caters to a broad audience. We continue to strategically add to its offerings with marquee titles from Fox and nearly every other program of note. The addition of The Masked Singer to Tubi provides a perfect example of the power of these assets combined. The show was a sensation when it launched on Fox. When we added The Masked Singer to Tubi, it added reach for advertisers, delivered significant view time on the platform, and broadened advertisers seeking to be associated with the young, diverse, and complementary audience that Tubi adds to the Fox offering. Another important differentiator for Tubi is its technology. Tubi is constantly enhancing its ad technology to provide better data and results to digital advertisers. For example, Tubi recently introduced its advanced frequency management tool, which reduces ad repetition. In an early study with a major insurance brand, this tool reduced overfrequency to the same viewers by more than 360%. Simply stated, rather than continuing to show the same ad to the same viewers, as is often the case across other AVOD platforms, Tubi’s tool enabled this insurance company to advertise to nearly 100,000 more households within the same ad buy. These compelling results led the insurance brand to make a multimillion-dollar ad payment to Tubi throughout 2021, and the brand is also a FOX advertiser now as well. Expect more technology advancements and offerings in the months ahead. Tubi’s tech stack in general will separate Tubi from lesser AVOD options for years to come. Tubi has also rapidly become a synergistic acquisition. We’ve had incredible success with advertisers who find their way to Tubi from existing relationships with other FOX brands. For instance, 50 advertisers who had not previously worked with Tubi chose to buy Tubi during their recent upfront season. By combining Tubi into our portfolio of advertisers, we reached brands that may have been unfamiliar with Tubi’s unique and additive audience, nearly 50% of which doesn’t have a pay-TV subscription. We have a laser focus on growth and monetization at Tubi. As we continue to invest in Tubi, we believe it will become the AVOD platform of choice for viewers and digital advertisers alike, and become a larger piece of the broader Fox Corporation business. Translating this financially, we expect Tubi revenues to more than double in the current fiscal year, to exceed $300 million. And as we look out a few years, we envision Tubi becoming a $1 billion business and a core pillar of FOX. Tubi is a tremendous addition to our pre-existing portfolio of growing digital businesses, which we have built over time in a fiscally responsible manner. Over the first half of our fiscal year, our FOX News, Sports, Entertainment, and Television Stations, digital businesses have attracted more than 330 million average monthly users, over a 30% increase in the comparable period in the prior year. These users spent more than 160 billion minutes consuming our digital content during this time, an increase of more than 70% from the first half of fiscal 2020. Tubi’s digital destinations coupled with Tubi and Credible, we have generated well over $650 million of digital revenue through the first half of our fiscal year, with approximately two-thirds representing digital advertising revenues. These rapidly growing platforms, along with our must-have linear television brands and market-expanding partnerships are exceeding expectations. As a united portfolio, they are even stronger with wide run rates for the businesses to collaborate, retaining existing viewers, harnessing new audiences, engaging consumers in new ways, and broadening the touch points users have with FOX. And now, Steve will take us through the details of the quarter.

Thanks, Lachlan, and good morning. Highlighting the strength and momentum across our businesses, the company delivered double-digit growth in advertising revenues along with underlying double-digit growth in affiliate revenues in our fiscal second quarter. Our total advertising revenues increased 14%, with this strong growth led by the FOX Television Stations, the inclusion of Tubi, and continued linear and digital strength at FOX News Media. As we previewed on our most recent earnings call, the growth at our television stations was driven by record political advertising revenues. When viewed across the entirety of our portfolio, we generated quarterly political advertising revenues of approximately $250 million, bringing our fiscal year-to-date to approximately $340 million. Total company affiliate revenues increased double digits on an underlying basis in the quarter, once again demonstrating the strength of our brands and our focused portfolio of leadership channels. During the quarter, we recorded an accrual for potential distribution credits due to canceled college football games. While this credit was fully offset in our programming costs, on a reported basis, our total company affiliate revenue growth was 6%. This strength in our two most significant revenue streams drove total reported company revenues to $4.09 billion, up 8% over the comparative period in fiscal 2020. Quarterly adjusted EBITDA was $305 million, up $44 million over the comparative period in fiscal 2020, due to the top line increases in revenues partially offset by contractual annual escalators for our key sports franchises. Net income attributable to stockholders of $224 million or $0.37 per share was lower than the $300 million or $0.48 per share in the prior year quarter. This decrease was the result of higher gains recognized in other net in the prior year quarter, most notably from the mark-to-market adjustments associated with the company’s investments. Excluding this impact and other non-core items, adjusted EPS of $0.16 per share was up $0.06 compared to last year’s $0.10 per share, primarily reflecting the growth in EBITDA. Turning to the performance of our operating segments for the quarter, with cable networks EBITDA of $571 million, was up 3% on revenue growth of 1%. Cable advertising revenues increased 31%, with the record audiences and digital engagement of FOX News Media leading this growth. Underlying cable affiliate revenues increased mid-single digits. This growth was underpinned by rate increases, including double-digit pricing gains at FOX News Media, along with a moderation in the rate of industry subscriber erosion, which is currently trending at a little over 5%. As I mentioned earlier, during the quarter, there were a number of COVID-19 related cancellations of college football games. As a result, we have recorded an accrual for the potential credit of certain distribution fees. While this credit reduces our reported cable affiliate revenues, it is broadly offset by a corresponding reduction in rights costs. Cable other revenues decreased by 32%, primarily due to lower sports sub-licensing revenues, again as a result of the cancellation of certain college football games due to COVID-19. These lower sub-licensing revenues were also broadly offset by corresponding reduction in rights costs. EBITDA at our cable segment increased by $15 million over the prior year period. This reflects the revenue growth that I just noted, partially offset by the shift of certain sports costs from our fiscal first quarter into our second quarter that we foreshadowed on our last call. The Television segment reported revenue growth of 13%, with the EBITDA loss improving $29 million to $185 million. Continuing the consistently strong growth we’ve delivered since the establishment of Fox Corp, Television affiliate revenues increased 23% in the quarter. This reflects double-digit increases for both our programming fees from non-owned station affiliates and direct retransmission revenues at our owned and operated stations. The growth in Television advertising revenues was driven by the record political advertising I mentioned earlier, coupled with the addition of revenues from the fast-growing Tubi. These factors were partially offset in the segment by lower sports advertising revenues, including the impact of COVID-related cancellations of certain college football games, along with the postponement of key scripted entertainment programming. EBITDA at our Television segment increased $29 million over the prior year period. This reflects the revenue growth that I just noted, as well as higher programming rights amortization of FOX Sports, primarily due to the contractual annual rights increases for our major sports franchises, including the NFL, and incremental costs due to the consolidation of Tubi. Partially offsetting these increases was a lower programming rights amortization at FOX Entertainment due to the postponement of key scripted entertainment programming as a result of COVID-19. Turning now to free cash flow, which we calculate as net cash provided by operating activities, less cash invested in property, plant, and equipment. In the quarter, we generated a free cash flow loss of $155 million, which is consistent with the seasonality of working capital in our business. Reflecting our continued confidence in the business and our balanced approach to capital allocation, today we announced a semi-annual dividend of $0.23 per share and continue to be active with our stock repurchase program. So far, this fiscal year, we have deployed $450 million of capital to repurchase approximately 11.3 million Class A shares and 4.9 million Class B shares against our buyback authorization of $2 billion. We have now cumulatively repurchased just over $1 billion, representing approximately 5.4% of our total shares outstanding since the launch of the buyback program in November 2019. From a balance sheet perspective, we ended the quarter with $4.5 billion in cash and $7.9 billion in debt. Looking through to the second half of our fiscal year is worth reminding you of a few factors that will impact comparability with the prior year. Starting with Sport. In the current March quarter, we will compare against last year’s broadcast, the Super Bowl 54 on FOX. However, we did enjoy the benefit of one additional week of the regular season, as well as the rotating divisional playoff game this January. Our plans also anticipate a timely start to the NASCAR and Major League Baseball seasons. However, as we have demonstrated in the past, we will adapt to any potential COVID-driven disruptions across our sports calendar. Meanwhile, from an entertainment perspective, due to COVID-19, the launch of our key scripted titles on the FOX network has shifted from the first half into the second half of our fiscal year, with the completion of our full season still dependent on minimal future disruptions to production schedules. In terms of cash flow, we continue to anticipate relatively low working capital usage over the course of the full fiscal year; and as a result, the normal working capital deficit exhibited in this year’s first half reverses in the second half of the year. As we foreshadowed in the past, we continue to expect a higher level of capital expenditure in fiscal 2021 to support the final phase of the build-out of our technical broadcast facility in Arizona and the upgrade of some of our local station facilities. With the majority of our full year advertising revenue already earned in the first half, a very light slate of affiliate renewals and a working capital tailwind that will build on our already ample liquidity, we approach the second half of this fiscal year from a position of financial strength. Assuming the continuation of a constructive macroeconomic environment, we intend to continue to deploy capital towards share repurchases and target an additional $550 million in our fiscal second half to reach $1 billion in total buyback volume this fiscal year. To sum this all up, the results of our first two fiscal quarters demonstrate the strength of our underlying business. Its operating momentum combined with the benefits of strong free cash flow and liquidity and moderate leverage, position us particularly well for the future. And with that, I will now turn the call back to Joe.

Thank you, Steve. And now we’d be happy to take questions from the Investment Community.

Your first question comes from Ben Swinburne from Morgan Stanley. Please go ahead.

Good morning. My question is around FOX News. Obviously, there has been a lot written about the network and the business in the press of late, and you guys just put up a really strong first half of the year. Can you talk a little bit about the strategy to maintain leadership at the network, particularly sort of post the last administration, post the inauguration? And cord cutting is obviously out of everybody’s control, but if you think about a mid-single-digit headwind on volume for that business, do you think you can grow cash flows over time? I ask this because when I look at the stock, it seems like the FOX News outlook is not being reflected in the stock price. I’m curious if you think that business can grow even with the industry headwinds that we’re all aware of? Thanks a lot.

Hey, Ben; it’s Lachlan. Thank you for the question. You’re right, there is a lot being written about, and few more trees have been cut down. I think I’m writing about it in the days and weeks to come. Look, I think the fundamentals – let me answer – there are two parts to your question. Let me answer – I’ll answer both parts, but let me answer the first part broadly and then specifically. So, in the journalism business, the journals in trade. What you do is you work out what your market is and you produce the best product you can possibly produce for that target market, right, for your readers, listeners, or viewers. FOX News, the success of FOX News throughout its entire history has been to provide the absolute best news and opinion for a market that we believe is firmly center-right. And we don’t pivot or change that, and we haven’t pivoted or changed that throughout the history of FOX News. So, we’ll continue to provide the best journalism with the best hosts, the best analysis, and the best opinion going forward, as we have throughout our past news cycles. And we believe where we’re targeted to the center-right is exactly where we should be targeted, as we’ve been. We don’t need to go further right. We don’t believe America is further right, and we’re obviously not going to pivot left. All of our significant competitors are to the far left. So, we’ll stick where we are, and we think that’s exactly right and that’s the best thing for the business and for our viewers. Now with that, we will see a return in our ratings dominance. As I said, we believe the center-right is where America’s politics are, and we expect, as we foreshadowed in the last call, our ratings to be tempered after this election cycle, and we were right. We’re down about 13% in ratings. If I go back to the Trump/Clinton election, CNN was down about 17%, and MSNBC 10%. So, CNN 17%, MSNBC – sorry, yes, that’s right. CNN 17%, MSNBC 10%. And so, we’re right in between in that metric. So, this is a cycle that we’ve seen before. It’s a cycle we expected. We look forward to the news normalizing, and we will go on from strength to strength. The second part of your question though about really driving the business, continuing to drive the business harder and continue to generate cash, I think we look at in two different ways. One is obviously the pricing power of our affiliate revenue remains relatively untapped. We think we can continue to drive pricing for FOX News well ahead of any sort of volume declines in subscriber numbers. That’s very clear to us looking forward. And I think the other part is that the new businesses that we’re driving out of FOX News Media, now with FOX Nation, FOX – the FOX Business Channel is growing, the FOX digital, all of the FOX digital assets, FOXNews.com and our radio, Fox radio; and now we announced this past quarter the launch, the coming launch of FOX Weather. So, when we look at FOX News Media, really is a broader ecosystem of FOX News brands that are all growing, and will all further contribute to growing EBITDA and cash going forward. Thanks, Ben.

Operator, we could go to the next question.

Your next question comes from the line of Jessica Reif Ehrlich from Bank of America. Please go ahead.

Thank you. I have a multipart topic on sports betting. Can you talk about the impact that sports betting had on the quarter at the local station level? And as the adoption continues to grow state-by-state, how big do you think that advertising pool can be? And then can you give us any update on your options and what you’re thinking about your options on FOX Bet as well? And finally, on the NFL, how much is sports betting part of the conversation in your negotiations for the upcoming cycle? Thank you.

Sorry, Jessica, can you just repeat the last one of the multiple? I guess definitely two questions.

One question on sports betting.

Yes.

So, on the NFL, I mean negotiations presumably are progressing hopefully well. How much is sports betting part of the conversation, given your unique assets?

Great. Thank you, Jessica. Nice to hear your voice as well. So, first of all, from an advertising point of view, our strongest category in the station group is entertainment, which is pacing up 10% year-on-year. Entertainment is really made up of two things. One is sort of streaming services, and the second is sports betting. So, absolutely the sort of wagering businesses, both locally and in the States, we’re wagering as legal but also FanDuel and DraftKings are really helping drive local performance at the station group level. I don’t have that sort of broken out as – not as even as a category, but as a sub-category in sports wagering for you, but it is in the very top growth tier for us. And then obviously, so we’re enjoying the growth of our sports betting, sports wagering on multiple fronts. One, from an advertising front at the local station level, but also obviously participating in it with FOX Bet and with our action, our option in FanDuel. We are really incredibly excited about the opportunities for FOX Bet. The Super 6, as we’ve talked before in these calls and in person, the Super 6 funnel at the top of FOX Bet is working very efficiently. We set ourselves a goal during this NFL season to reach over 4 million active users. I will actually say, we set a lower goal. We’re tracking so well during – middle of the football season that we increased the goal to actually 4.4 million users, which we achieved at the very end of the season. And that funnel is then successfully driving people into FOX Bet wagering, where it’s licensed and legal. We just launched in Michigan on January 26, and it was a very successful launch for us in that state. The – I think we’ve talked about before, but the FanDuel option for our 18.5% is a 10-year option beginning this summer. I think it’s June or July. And that option is based on fair market value, which are set with the Flutter acquisition of the Fastball stake in FanDuel. So, we will continue to be proponents and fans of the Duel brand strategy with FOX Bet alongside with FanDuel in these markets. And we are enjoying our partnership, our deep partnership, an important part of our partnership with Flutter. As to the NFL, this is a growing business; and absolutely, the NFL understands that this is a business that’s important to us and to how we are able to monetize our rights, our deals with them. I don’t want to go into the detail of the NFL negotiations that we continue to be in – we’ve been in for a while. We hope to bring those to a conclusion in the near to medium-term. But the NFL is very aware of the importance of sports wagering, I’m sure to us, and I’m sure to others as well. Thank you for the question, Jessica.

Operator, we can go to the next question.

Your next question comes from the line of Doug Mitchelson from Credit Suisse. Please go ahead.

Thanks so much. So, a question for Lachlan, but I guess partly a jump ball. I’m just curious, future profitability potential for Tubi. So that’s the one question. The details are, you talked about the usage up 100% and advertising up 70%. So, a view time of 70%, revenue up more than 100%. So, CPMs are obviously expanded. I’m just curious what the level of ad pricing is now relative to, say, broadcast primetime and where you see upside there? And you talked about Tubi being the leading AVOD platform in the future, and I’m just curious, your view on competitive differentiation. I think a lot of content that ends up on these AVOD services is not exclusive. And so, what do you think will attract people to Tubi versus other AVOD platforms that are out there? And then lastly, just the margin structure when you hit that $1 billion plus of ad revenue for Tubi would be super interesting. Thank you.

Thank you very much, Doug. So, let me start and Steve can jump in if I’ve forgotten any part of the question. So, with Tubi – and I’ll answer your question honestly, but I’m not sure when I look at competitors’ SVOD services whether you prefer us to say we would be profitable early or we’d spend billions of dollars investing in the business before we saw breakeven because certainly, our strategy is very different from our competitor strategy. We see the SVOD competitive set as the potential to lose very many billions of dollars. We see it is very crowded. We see it is very hard to stand apart and differentiate ourselves within SVOD. And that’s why we’ve really chosen to embrace the AVOD as our direct-to-consumer strategy, and we think we can do this for really two reasons. I must say, what we hope to achieve out of this, or we will achieve out of this is really twofold. One, and just to be very clear, because I spent a lot of words in my preamble to this call talking about Tubi, but if the headline wasn’t clear, it is that we expect to win in AVOD. We expect to win in AVOD and be the leading AVOD player in this country. And secondly, we expect to be able to do it by reinvesting our profits, but not by losing billions of dollars in programming costs or other costs in the time it takes to breakeven. Because of those two things, we will drive Tubi very aggressively. We will hit $1 billion in the medium term or near-term in revenue, and the business will ultimately become a very profitable one for us. The other elements of the question, I think on sort of our broadcast CPMs versus digital CPMs; digital CPMs are lower than broadcaster and they’re sort of the high teens. Obviously, some of the tech stack allows us to drive that further. And Steve, did I miss any other part?

Yes. So, Doug, just in terms of the other question about margin development as we get to that $1 billion, we aren’t going to put a target out there obviously. But I think the way you should think about it is, in the near term, if you look back over the last six months, Tubi has actually been P&L neutral for us, up from a bottom-line perspective. We would expect that to change over the course of the second half as we continue to invest in growth. And then over time as we take our foot off the gas in terms of investing in growth, you’d see some pretty good conversion of revenue into bottom line margin as this business gets to scale. So, and when you look at that revenue development in the near term, Lachlan is absolutely right in terms of where CPMs are. The way where we see a lot of headroom, where we’ve gotten a lot of growth from in the initial phase has just been fill rate. And so, there’s still plenty of headroom to take that further north.

Operator, we can go to the next question.

Your next question comes from the line of Robert Fishman from MoffettNathanson. Please go ahead.

Hi. Good morning. As you think about future negotiations with the major sports leagues, how do you think Fox is positioned with its portfolio of networks plus Tubi compared to the other media companies that look to be using a hybrid approach of linear networks and their SVOD services for the top sports rights? And then on a related note, in light of NBC Sports Network shutting down, can you discuss the company’s outlook for FOX Sports 1 and FOX Sports 2, and how you can use Flutter or FanDuel partnership to possibly play a role there?

Sure. Thanks, Robert, for the question. So, first of all, we see NBC Sports, the announcement of it shutting down as probably a net positive for FOX Sports 1. There is less competition, I suppose, although we never saw them as our main competition. This year, FOX Sports 1 beat both ESPN2 and NBCSN for an entire year for the first time ever. So, we feel very well positioned. Obviously, with COVID and with some sports being less available, opinion programming, which is probably very reliable and you don’t have the higher rights costs, accounted for 35% of the FOX Sports 1 schedule and over 20% of viewing, which I think is an important statistic. It shows that you can be compelling and you can win with a mix of both live sports, but also with the sports analysis and opinion that Fox Sports 1 has. Clearly, having a breadth of sports platforms will ultimately help FOX Bet and our partnership also with FanDuel. I’d also include in that obviously the local stations and the amount of time and effort the local stations and their news and their sports broadcasting also contribute to promoting FOX Bet and engaging also with our partners at FanDuel. The last part there in terms of sports rights, I think that the thing that Fox has always had as part of its DNA is really a focus on the major sports rights as well. So, it’s obviously Major League Baseball, the NFL, WWE. And so, our focus on our bouquet of sports is really the big sports that are going to move the needle and not so much in smaller – still great sports but smaller sports for other platforms.

Operator, we have time for one more question.

Okay. That question comes from the line of Alexia Quadrani from JPMorgan. Please go ahead.

Thank you. Can you elaborate on the overall advertising market? You had very positive comments on Tubi and its ad outlook, and I assume most of that is coming from the investments and improvements you’re making on the platform, but are you also seeing kind of a nice tailwind from an ad recovery? And then just a follow-up to circle back on some comments you made earlier on, on seeing some improvements in the subscriber declines. I’m curious if you can give us some color if that slight improvement is coming from bigger contributions or from virtual MVPDs or something else?

Sure. So, first on the ad market, and in this last quarter, we’re talking about, obviously, the impact of political as we’ve discussed, Alexia, has just been tremendous. I’d be tempted to say we’ll never see a political season so big, but I don’t think that’s true. I think when you have a Senate and the House so finely balanced, I think we’re going to see these records broken in two years and four years for sure. So, the spending was pretty staggering. Obviously, we have the additional bonus of sorts with the Atlanta station and the Georgia runoff, which I think contributed to. I’m not sure it was just a runoff, but the Atlanta station alone contributed about $60 million of political revenue in itself. So, in the past quarter, obviously the story, the headline is all political. I think in the current quarter, obviously we have difficult comps because of the Super Bowl, and obviously having had the Super Bowl last year, which by the way rated almost 102 million viewers. It was a terrific Super Bowl and a great achievement. That obviously, we can take that comp out. So, if we strip out the Super Bowl revenue, we’re pacing in the negative single – mid-single-digits, maybe even a little bit better than that. So mid-single-digits down 5%, 6% as where we would expect to end up in local advertising for the quarter. That’s a tremendous improvement if we look to COVID from a year ago, right. Every quarter, every month, we have seen advertisers come back. And now we are stripping out football and stripping out political and everything else. We’re about back to where we’d expect to be year-on-year. Of course, looking forward, the comps become much better because we will have been – we’ll be comparing to the first quarter that was COVID affected versus now being in a more normalized advertising environment. From a category’s point of view, I think I mentioned too in response to Jessica’s question, entertainment leads the categories; home, professional services, all strong. I should just mention that on the flip side, that automotive, which is obviously a very large category for us, is still down. But this is primarily driven, skewed upon by our domestic manufacturers. In fact, foreign auto spending is roughly flat. By the way, the second part of your question.

Yes, Alexia, just in terms of the improvement in sub-decline, if I look where we were like six months ago, I think what we’ve seen is continued growth of the virtual MVPDs for sure. But we’ve also seen a bit more balance coming. We’ve actually seen the traditional sub-decline has moderated a touch. So, coming from both sides of that equation.

At this point, we are out of time, but if you have any further questions, please give me or Dan Carey a call. Thank you once again for joining today’s call.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.